How to manage an underperforming employee
Sometimes, an employee’s performance may not be where it needs to be. While this can be for a range of reasons, it’s important to understand how best to address it, including the right steps to take and, if necessary, any legal pathways to follow. A thoughtful approach can help your employee thrive to the best of their ability, and benefit your company too.
Signs of an underperforming employee
Sometimes, an employee might not be delivering to what is required in their role. This could be a gradual change or happen quickly, and can be spotted through a number of signs, such as:
Failure to complete assigned tasks
Regularly missing deadlines
Not meeting KPIs
Unexplained absenteeism or regularly being late
Complaints from other team members
Poor quality work
Justine Alter, organisational psychologist and Co-Founder of Transitioning Well, says there can be many reasons why an employee might be underperforming. “It’s important to recognise the underlying factors so you can tailor your approach, provide clarity, and potentially re-engage the employee by better aligning their work with what drives them and where they see their value.”
Each employee has strengths to offer a workplace, but those strengths, experiences and skills need to be matched to the right work environment – one that should be psychologically safe and supportive, says Alter. “We have to move away from seeing underperformance as an individual trait and rather see it contextually,” she advises.
Some reasons for underperformance could include:
Poor role clarity
Misfit of skills, experience and knowledge required for the role
Work overload and strain
Low drive or desire to grow and improve (‘fixed mindset’)
A lack of support or a ‘fear of failure’ culture
Psychologically unsafe work environment/culture
It’s also important to recognise that, in some cases, underperformance may not actually be about work at all – the employee could be facing personal challenges, such as physical or mental health challenges or family crises.
Ways to offer support
To start, Alter suggests setting up a 1:1 meeting to check in and discuss observations on the team member’s underperformance. Rather than jumping straight into the reasons why, this should start with talking about the issues at hand, including examples.
This could be noting missed KPIs, sharing feedback on quality of work from the team, or flagging repeated lateness or absenteeism.
It helps to be specific here, rather than making broad sweeping statements. Employers should also avoid blaming and isolating the individual as a problem, says Alter.
From there, she suggests trying to understand what’s impacting their performance, inviting an open conversation and creating a tailored approach to lift performance through a compassionate lens. In many cases, you might find the employee is just as frustrated as you are!
For example, if the employee has missed deadlines several times recently, you might open the conversation by saying, “I’ve noticed that you haven’t delivered work on time for your last two projects – let's talk about that. Can you share the reasons for missing deadlines?”
It helps to stay open minded as the reasons could be quite broad and the action will differ depending on the reason for underperformance. The employee might need:
More clarity on their role and expectations. Map out KPIs and other responsibilities for the role in detail.
Additional training or mentoring to meet the specific needs of the role and business. It could even help to pair them with a more experienced team member.
Their workload or responsibilities reduced, if there’s too much on their plate.
Motivation through 1:1 support or even simply more recognition.
Time off, flexible working or other accommodations for personal challenges.
Cultural or team issues might need a broader approach, especially if you get similar feedback from other team members. If you have an HR team, they should be able to guide you on the best approach to take.
It's also important to acknowledge that personal issues outside of work such as mental or physical health challenges, caregiving responsibilities, or family crises can have a significant impact on employee performance. In these cases, showing empathy and creating space for open and respectful conversations is key.
Ask how the business might offer support, whether that’s flexible hours, reduced workload, access to employee assistance programs (EAP), or simply checking in regularly. Demonstrating that you care can build trust, reduce stress, and help the employee feel more supported and motivated to re-engage with their work.
When to use a performance plan
Ideally, employers should be able to informally manage performance issues through tools such as meetings to discuss challenges, reviewing work, giving constructive feedback, and mentoring, advises Andrew Jewell, Principal at Jewell Hancock Employment Lawyers.
However, sometimes informal performance management doesn’t work, in which case a formal performance management process (or PIP) might be needed. This is separate to a typical performance review , which looks at overall job performance during a period, as it focuses on addressing specific issues.
An employee should be told how they are falling short with reference to what is expected from them (for instance, their position description or KPIs). “It helps to provide the employee with actual examples where they have not met expectations,” adds Jewell.
When creating a PIP, employers should:
Set goals that are specific, measurable and achievable for the employee
Set a period of time for the PIP. Typically, a PIP will be 4-12 weeks, but this will depend on the circumstances
Provide support and training to help the employee achieve those goals
Tell the employee from the outset what could happen if expectations aren’t met. For instance, this could be a warning, a final warning, demotion, extending the PIP, more supervision and training, or termination of employment
Provide regular feedback to the employee throughout the PIP, so they know how they are tracking and can make adjustments where needed
At the end of the PIP, the employer should assess the employee's performance. They may choose to end the PIP, extend it or take other action.
Legal considerations when managing under-performance
In Australia, the legal requirements for managing underperforming employees may be found in a policy or enterprise agreement, but otherwise will rely on an employee’s protections from unfair dismissal.
“If an employee is protected from unfair dismissal and an employer dismisses them for poor performance, then they must have warned of their poor performance and given a reasonable opportunity to improve their performance,” says Andrew Jewell, Principal at Jewell Hancock Employment Lawyers.
“Anti-discrimination protection also applies to managing underperformance, so businesses cannot be motivated by an illegal reason such as age or pregnancy.”
Businesses in Australia can find more information via Fair Work.
It’s important to seek out specialist HR or legal consultation for advice on an individual situation if needed.
What to do if nothing works
What happens if an employee still doesn’t perform? “Employers can continue to manage performance by issuing warnings, but will ultimately have to determine whether they should dismiss the employee,” says Jewell.
However, in some cases you might offer more training and support or consult with the employee and reach an agreement to change their role.
If it comes to this point, businesses should also think about what recruiting a replacement would involve. “Sometimes employers can judge an employee’s performance ‘in a vacuum’ and move them on only to realise that recruitment is difficult and the replacement is performing at a similar or lower level,” says Jewell.
While managing underperformance can be challenging, approaching the situation with compassion, clear communication, and proper processes not only protects your business legally, but offers the best chance to help employees reach their potential.
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Information provided in this article is general only and does not constitute legal advice and should not be relied upon as such. SEEK provides no warranty as to its accuracy, reliability or completeness. Before taking any course of action related to this article you should make your own inquiries and seek independent advice (including appropriate legal advice) on whether it is suitable for your circumstances.